4 Top Reasons That Could Make You A Defaulter
Nobody likes to stay in debt. On most occasions, a borrower is forced to become a defaulter because of sudden turn of events in his life or some bad decisions, which could be one of the following or a combination thereof:
I. Loss Of Job
Unemployment means that there will be a halt in the inflow of money. Hence, the borrower will focus more on resolving urgent monetary issues such as food and clothing rather than repaying the loan.
II. Unfair Terms And Conditions Of Loan
Many times a person needs the money so much that he chooses the first loan that is offered. Unscrupulous lenders take advantage of the sorry state of the borrower and they lure him with a big amount.
However, when it comes to repayment of the same, the borrower fails to comply and that is how he defaults.
III. Misunderstanding Of Repayment Schedule/Amount
Seeing the amount and easy availability of a loan, many borrowers do not pay much attention to the repayment schedule/amount. At the time of repayment, when the lender debits the borrower’s bank account, he finds insufficient funds in it.
The borrower, having defaulted, is not only required to repay the balance amount but also late fees with it.
IV. Natural Disaster
Natural disasters can burden a borrower with a host of new expenses. He may be required to rebuild his home, repair his vehicle, purchase new clothes, etc. In such a situation, he would surely skip repayment and spend money on more urgent needs.
Here Is How You Can Lower Your Chances Of Becoming A Defaulter
While you cannot protect yourself from untoward situations hampering your financial security, you could still control other causes.
• Before agreeing to borrow, you should always understand the terms of the loan. Ask the lender about the interest rate, APR, and the final repayment amount.
• If you think you could be fired from your job, look for second employment. If you have a hobby like painting or playing the guitar, you could give tuition.
• Insure your house, vehicle, equipment, etc. so that you could rebuild them easily.
Unemployment means that there will be a halt in the inflow of money. Hence, the borrower will focus more on resolving urgent monetary issues such as food and clothing rather than repaying the loan.
II. Unfair Terms And Conditions Of Loan
Many times a person needs the money so much that he chooses the first loan that is offered. Unscrupulous lenders take advantage of the sorry state of the borrower and they lure him with a big amount.
However, when it comes to repayment of the same, the borrower fails to comply and that is how he defaults.
III. Misunderstanding Of Repayment Schedule/Amount
Seeing the amount and easy availability of a loan, many borrowers do not pay much attention to the repayment schedule/amount. At the time of repayment, when the lender debits the borrower’s bank account, he finds insufficient funds in it.
The borrower, having defaulted, is not only required to repay the balance amount but also late fees with it.
IV. Natural Disaster
Natural disasters can burden a borrower with a host of new expenses. He may be required to rebuild his home, repair his vehicle, purchase new clothes, etc. In such a situation, he would surely skip repayment and spend money on more urgent needs.
Here Is How You Can Lower Your Chances Of Becoming A Defaulter
While you cannot protect yourself from untoward situations hampering your financial security, you could still control other causes.
• Before agreeing to borrow, you should always understand the terms of the loan. Ask the lender about the interest rate, APR, and the final repayment amount.
• If you think you could be fired from your job, look for second employment. If you have a hobby like painting or playing the guitar, you could give tuition.
• Insure your house, vehicle, equipment, etc. so that you could rebuild them easily.
